On Monday, October 5, 2021, I went to watch my good friend and colleague Bernard Alexander (who also co-counseled a hard fought disability discrimination case we took to trial and won) give his closing arguments in Owen Diaz v. Tesla.
The monumental nature of the case was not lost on me. This was the first racial harassment case against the most valuable car manufacturer in the world to make it to trial. Tesla, like most companies uses arbitration agreements to keep legal claims against it out of court and out of the public eye.
Owen Diaz, a former black employee at Tesla's Fremont, California, factory, did not sign an arbitration agreement and finally got his day in court after years of litigation. Mr. Diaz endured an incredibly hostile work environment that included the pervasive use of the "n" word, racial slurs, offensive graffiti in the bathroom, and racially charged taunts. Mr. Diaz sued Tesla for: (1) a hostile work environment based on race (or harassment based on race), (2) failure to prevent harassment from occurring and (3) negligent supervision and retention of an employee as his supervisor was the main culprit of the harassment. Mr. Diaz's lawyers argued that Tesla did not have a "zero tolerance" policy, but instead, had a "zero responsibility" policy, turning a blind eye to unlawful treatment Mr. Diaz faced at the company.
A unanimous San Francisco federal jury issued a historic $137 Million verdict against Tesla (the case is considered to be the largest jury verdict in a single plaintiff racial harassment case). To be precise, the jury ordered Tesla to pay $6.9 Million to Mr. Diaz for emotional distress damages and $130 Million in punitive damages for its failure to prevent Mr. Diaz's harm. The purpose of punitive damages is to punish the defendant and to deter similar acts in the future. The jury's substantial punitive damage award, sent a message to Tesla that its willful complacency in the workplace will not be tolerated.
Justice prevailed on Monday. Mr. Diaz was vindicated as were so many employees who suffer harassment and race discrimination in the workplace all too frequently. Employers need to think twice about the consequences of failing to prevent a hostile work environment for their employees.